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Annual Report 2013Designed & Printed by Cole’s Printery Limited
Wildey, St. Michael, [email protected]
Annual Report 20131
Annual Report 2013
Annual Report 2013 2
Annual Report 20133Table of Contents
Letter of Transmittal .......................................................................................................... 4
Mission & Values ............................................................................................................... 5
Board of Directors ............................................................................................................ 6
Committees of the Board of Directors .......................................................................... 8
Principal Officers .............................................................................................................. 9
Chairman’s Message ..................................................................................................... 10
General Manager’s Report ...........................................................................................11
Management Discussion and Analysis ....................................................................... 14
INDEPENDENT AUDITOR’S REPORT ................................................................................ 23
Annual Report 2013 4
Annual Report 20135
The Corporation maintains the following core values in the performance of its duties
• Service: To provide the best possible service never forgetting that what is done and the way it is done vitally affects the thousands of customers who depend on its service.
• Honesty: To conduct our business with honesty and integrity.
• Concern: To show concern for the welfare of our customer, fellow employees and the general public. We will protect the environment in which we live.
• Excellence: To strive for excellence in all that we do.
• Team Work: To work together in harmony as a team, combining our best thinking and efforts to make the Corporation the fi nest utility in the Nation.
Mission & Values
The mission of the Corporation is to provide and maintain a safe,
reliable, effi cient and competitive gas service to customers
and be instrumental in carrying out Government’s energy policy to
improve the quality of life in the community which we serve.
Annual Report 2013 6 Board of Directors
Sir Harcourt LewisCGM, JP, DPA, FIBA
Chairman of the Board
Mr. Winton GibbsDirector
General ManagerBarbados National Oil Co. Ltd.
Mr. Algernon AtherleyDirector
Miss Juliet DownesDirector
Mr. Noel GreenidgeDeputy Chairman
Mr. Ken LintonDirector
i i
Mr. David GilesDirector
Representative Barbados Workers Union
Ms. Doreen JohnsonDirector
Mr. Mark ParrisDirector
Annual Report 20137Board of Directors
Ms. Hazel GittensDirector
Representative of Permanent Secretary, Finance and
Economic Affairs
Mr. Hodson CarringtonDirector
Ms. Laura RudderCorporate Secretary
Mr. Jehu WiltshireDirector
Representative of Division of Energy and Telecommunications
Annual Report 2013 8
LEGAL COUNSELMr. Edmund King, Q.C.Mr. Michael Yearwood
AUDITORPricewaterhouseCoopers SRL
BANKERSRepublic Bank (Barbados) Limited
First Caribbean International (Barbados) LimitedScotiaBank Barbados
Committees of the Board of DirectorsFINANCE COMMITTEE
Sir Harcourt Lewis - ChairmanMr. Noel Greenidge
Mr. Mark ParrisRepresentative of Permanent Secretary, Finance and Economic Affairs
Representative of Division of Energy & Telecommunications
ESTABLISHMENTS COMMITTEESir Harcourt Lewis - Chairman
Mr. Noel Greenidge Miss Juliet Downes
Mr. Ken LintonRepresentative Barbados Workers Union
Representative of Division of Energy & Telecommunications
TECHNICAL COMMITTEESir Harcourt Lewis - Chairman
Mr. Ken LintonMr. Winton Gibbs
Representative of Division of Energy & Telecommunications
Annual Report 20139
PRINCIPAL OFFICERSMr. James St. Elmo Wallace Browne
General Manager
Mr. Birchmore DeCourcey ScantleburyManager Finance
Mr. Roger Emmanuel Arthur MartindaleManager Technical Operation
Ms. Mechelle Maria SmithManager Human Resources & Administration
Mrs. Andrea Burnett-EdwardTechnical Offi cer
Mr. Wosley John Wayne HolderTechnical Offi cer/Service Installations Coordinator
SENIOR OFFICERSTECHNICAL OPERATION
Jamal Squires, Trainee Petroleum EngineerStanley Phillips, Superintendent(ag)
Michael D Bascombe, ForemanDave Downes, Foreman(ag)
Charles Price, Supervisor Drawings & Records
FINANCE & ACCOUNTINGIan Bradshaw, Accountant
Karen Pilgrim, Asst. Accountant Costs & BudgetsPaula Gittens, Customer Service Offi cer
Margo Jordan, Meter Reading Supervisor(ag)Euclid Forde, Storekeeper
HUMAN RESOURCES & ADMINISTRATIONBasil Smart, Administrative Offi cer
Francine Forde, Human Resources Offi cer
EXECUTIVE OFFICERhonda Clarke, Executive Secretary
Noel King, Information Technology Offi cer(ag)
Annual Report 2013 10
On behalf of the Board of Directors, I am pleased to report on this the thirty-fi rst annual report of the National Petroleum Corporation.
Last year we celebrated our 30th Anniversary and it provided the opportunity for us to not only cogitate and relish in our achievements over the past three decades, but also to look to the years ahead maintaining our high standards of excellence in all areas of our operations.
The Corporation was able to attain another year of reported operational growth. This not only refl ects the hard work of a dedicated team but it also exemplifi es the result of important strategic choices made several years ago that put NPC in a better position to attain profi tability.
Operationally, one of our key objectives during the year related to increasing the gas yield to 95% of purchases. To achieve this target, an initial maintenance and replacement plan for the overland pipeline was implemented with the assistance of a loan to the tune of $3M funded by the National Insurance Scheme. The Corporation also capitalized on the works of the Greater Warrens Traffi c Improvement Project to realign approximately seven thousand feet of this pipeline. In total, this
Chairman’s Report
project facilitated the abandonment of over 25,000 feet of corroding infrastructure.
Cash fl ow still continues to be an area of concern for the entity and several streamlining costs management activities were undertaken during the year to assist with these efforts.
In the area of human relations and administration, with the enactment of the new Occupational Pensions Act, the Corporation commenced activities to have the pension plan registered in accordance with the requirements of the Act. A Board of Trustees was established in October 2012 and the plan is anticipated to be fully registered by the end of the next fi nancial year.
Throughout this year and the years to come, we remain focused on attaining our short and long term objectives through reducing ineffi ciencies and strengthening effi ciencies in all areas. I am therefore confi dent that we are strategically positioned to prosper, as well as create greater value for all our stakeholders in the years ahead.
Sir Harcourt Lewis, CMG,JP,DPA,FIBAChairman
Sir Harcourt Lewis, CGM, JP, DPA, FIBA Chairman of the Board
Subsequent to the fi nal production of this report our Chairman, Sir Harcourt Lewis, GCM, JP, DPA, FIBA passed away on January 13th, 2015.
Annual Report 201311
Mr. James St. Elmo Wallace Browne General Manager
General Manager’s Report
Since the onset of the global financial crisis, the year 2012/2013 has seen the worsening of some of the national financial stability indicators. The Central Bank of Barbados has reported a less than favorable performance by Barbados’ main revenue earning sectors, with Tourism inputs falling by an estimated 1.4% in the first quarter of 2013. Additionally they reported manufacturing as being “virtually flat” with no major improvements recorded in any of the key industries.
The prevailing business environs therefore continue to have a direct impact on NPC’s growth potential as approximately 60% of our commercial activities are directly related to the tourism industry.
These conditions have contributed to NPC’s limited cash flow and our ability to undertake mass expansion of our network, we therefore continued this year to optimize on opportunities to be more effective in our operations.
During the year under review, amongst its key objectives attained, were improvements in its procurement value chain for goods and services as well as in the optimization of the cost of our product, natural gas.
Procurement - Vendor ManagementThe objective of this endeavor was to reduce the cost of doing business throughout the full span of the procurement value chain. A review and streamlining of the Corporation’s procurement process was undertaken to ensure not only cost effectiveness but also to ensure compliance with procurement policies and procedures. One of the key initiatives implemented was the annual consolidation of shipments which led to a noticeable decline in international freight costs and customs duties.
Optimization of input CostsNetwork IntegrityOur Scada system was upgraded in 2012 to enhance the monitoring of the transmission network in real time. A transition was made to enable off site and real time monitoring via the mobile technology platform.
Overland PipelineThe Corporation’s transmission network included an overland pipeline which stretches over 30,000 linear feet. Over the past 40 years, the constant exposure to the corrosive elements within the atmosphere has resulted in excessive wear and tear of this section of our network and is believed to be a major contributor to our reduction in gas yield.
Annual Report 2013 12
In March 2013, it was reported that the Corporation was losing significant monthly revenue mainly associated with leaks on the overland pipeline and inefficiencies in our metering system.
In an effort to increase revenues and the health and safety working conditions for staff, a decision was taken to decommission the overland steel pipeline mains. At the end of the year under review the Corporation
successfully removed 25,000 linear feet of overland pipeline.
Meter functionality Analysis & Replacement ProgrammeTo complement the efforts at improving the Corporation’s gas yield through efficiencies in pipeline transport, a meter functionality and replacement programme was initiated. This programme’s aim was to reduce the revenue losses where natural gas goes unmetered as a result of a faulty or undersized meter. This programme included
• improving the custody transfer arrangement at the source
• Detailed load analysis of all commercial customers
• Meter size corrections for all commercial customers
To date the Corporation has been able to increase its net operating income for this financial year to $1,652,360. It is anticipated that further improvements will be achieved over the coming years.
Staff working of Fire Hill Section of Overland Line
Annual Report 201313
Year
** In
com
e Fr
omC
orp.
Tax
Net
Inco
me
All
Sour
ces
(Cre
dit)/
Cha
rge
(Def
icit)
for y
ear
At
New
lyA
t Yea
rC
onne
ctio
nsA
ctiv
eM
3$
$$
$31
st M
ar.
In U
seLa
idEn
d*D
urin
g Ye
arA
t Yea
r End
Valu
e
2013
333.
765.
8126
,892
99
7
20,0
25
12,2
07,4
45
15,4
03,1
33
16,4
39,9
90
(268
,887
)
8,
619,
100
2012
327.
954.
5425
,895
63
8
19,3
31
11,6
00,5
34
14,6
88,9
85
15,4
67,7
66
(500
)
13,5
02,5
57
20
1132
3.41
5.72
25,2
57
712
19
,048
10
,955
,502
13
,717
,538
15
,021
,260
2,
954,
583
13,7
91,9
52
20
1031
7.69
1.49
24,5
45
667
18
,713
12
,001
,105
14
,423
,600
15
,117
,565
-
1,
724,
585
2009
316.
202.
7223
,878
77
0
17,9
86
11,3
65,7
77
13,7
83,4
75
14,6
83,8
07
-
(2,9
22,2
03)
2008
313.
485.
0923
,108
88
3
17,6
17
11,9
16,1
09
13,9
78,0
64
15,2
01,1
46
-
(15,
812,
254)
20
0730
8.39
5.89
22,2
25
716
17
,064
11
,390
,879
12
,850
,320
13
,812
,714
11
9,16
4
(572
,666
)
2006
302.
503.
6321
,509
80
9
16,6
76
11,6
93,8
79
12,3
61,2
23
13,6
24,8
68
11,1
33
(2
,276
,098
)
20
0529
8.87
3.60
20,7
00
1,23
2
15
,851
10
,852
,153
10
,921
,578
11
,819
,606
(2
7,27
8)
(4,2
78,1
25)
2004
295.
2725
.56
19,4
68
1,28
0
14
,552
8,
180,
870
9,60
9,18
0
10
,510
,741
19
1,23
1
(1,6
20,3
81)
2001
-200
5 M
iles
of M
ain
figur
es w
ere
adju
sted
to re
flect
the
corr
ect n
ewly
laid
mai
n fo
r eac
h of
thos
e ye
ars
.
** G
ross
of d
isco
unts
and
allo
wan
ces
SUM
MA
RY
OF
OPE
RA
TIO
NS
FOR
PER
IOD
200
3/04
TO
201
2/13
Mile
s of
No.
of S
ervi
ces
Sale
of G
asM
ain
* S
ervi
ces
disc
onne
cted
are
not
acc
ount
ed fo
r
Annual Report 2013 14
Management is pleased to submit the following discussion and analysis for your information and consideration.
Our BusinessThe National Petroleum Corporation (NPC) is a government owned Corporation established as successor to the Natural Gas Corporation by the National Petroleum Corporation Act Cap 280. That Act came into effect on April 1 1981. The Corporation’s primary function is the sale of piped natural gas for domestic, commercial and industrial use.
The purpose of the enterprise is to provide and maintain an adequate, reliable, competitive, safe and efficient gas service to customers at a reasonable cost.
The Corporation’s general functions of the production of crude oil, natural gas and liquefied petroleum gas, which are permitted by statute, are carried out by an associated company, the Barbados National Oil Company Limited (BNOCL). Since January 24 1996, the Corporation has held 24.5% of the equity in BNOCL while the Government of Barbados holds 75.5%.
The Corporation is managed by a Board of Directors, which comprised eleven members under the chairmanship of Sir Harcourt Lewis, KCMG, GCM, J.P. who was re-appointed for a period of three (3) years, effective March 1, 2011.
FINANCIAL PERFORMANCE OVERVIEWNet IncomeDuring the financial year ending March 2013 the Corporation continued on its upward trend, recording another year of profitability. The audited financial statements show a operating profit of $1,652,360 when compared with an operating profit of $325,001 in the previous year ending March 2012.
This year’s share in profit of the Barbados National Oil Company decreased by 45.09% from $13,178,056 in 2012 to $7,235,627 which resulted in a total Net and Comprehensive Income for the current year of $8,619,100. This represented a decrease of 36.17% when compared with the previous year.
Revenue StreamNet Revenue from gas sales rose by 5.71% from $14,989,872 in 2012 to $15,845,293 in 2013. This was realised through growth in commercial sales during the period under review. Sales to customers in the commercial category represented 67% of the net revenue.
Residential SalesTotal sales volume to residential customers increased marginally by 1.59% from 2,565,001 standard cubic metres in the previous year to 2,605,825 in the current year. At the end of the financial year the total number of active customers in this category stood at 19,287 an increase of 667 active customers when compared with the previous year.
Commercial SalesCommercial sales volume increased by 608,484 standard cubic metres from 8,359,382 standard cubic metres to 8,697,866 standard cubic metres or 7.28%. At the end of the financial year the number of active commercial customers stood at 736 with an average annual usage of 12,185 cubic metres.
Special Rate SalesFor the year ending 2013, no sales were made to our special rate customer, Barbados Light and Power, as they have temporarily ceased the intake of natural gas due to operational issues. However sales to the Queen Elizabeth Hospital continued on its downward trend totalled 633,754 standard cubic meters from 676,151 standard cubic meters, a decrease of 42,397 standard cubic meters or 6.27%.
Management Discussion and Analysis
Annual Report 201315
-
5,000,000
10,000,000
15,000,000
20,000,000
2012
/13
2011
/12
2010
/11
2009
/10
2008
/09
2007
/08
2006
/07
2005
/06
2004
/05
2003
/04
Gross Revenue from gas Sales ($) 2003/04 to 2012/13
Residential Commercial Special Rate
- 2,000,000 4,000,000 6,000,000 8,000,000
10,000,000 12,000,000 14,000,000
2012
/13
2011
/12
2010
/11
2009
/10
2008
/09
2007
/08
2006
/07
2005
/06
2004
/05
2003
/04
Gas Sales in Cubic Meters (M3) 2003/04 to 2012/13
Residential Commercial Special Rate
- 2,000,000 4,000,000 6,000,000 8,000,000
10,000,000 12,000,000 14,000,000 16,000,000
Value of gas Sold ($) 2003/04 to 2012/13
Residential Commercial Special Rate
Analysis of Gas Sales
No. of Active
Customers (Mar-31)
ResidentialCommercial Special Rate
2012/13 2011/12 2010/11 2009/10 2008/09 2007/08 2006/07 2005/06 2004/05 2003/04
19287736
2
18620709
2
183267193
18011700
2
173086753
169356784
16425635
4
16019654
3
152336162
13980570
2
Total 20025 19331 19048 18713 17986 17617 17064 16676 15851 14552
Annual Report 2013 16
Capital Expenditure $
Land and Buildings 36,984
Gas Wells, Pipelines, Production and Transmission 45,693
Distribution Plant and Equipment Equipment 2,877,042
Moveable Equipment and Furniture 147,710
ExpensesOperating expenses for the year ending March 2013 totalled $14,305,942, a decrease of $328,709 over last year’s total operating expenses. General, administrative and commercial expenses accounted for 52.97% of the total Operating Expenses.
Capital expenditure for the year totalled $3,107,429 under the following heads:
OPERATIONS OVERVIEWGas Supply & ReservesPurchase of natural gas from the Barbados National Oil Company Limited(BNOCL) was 14,208,649 standard cubic metres. The Corporation’s Well #19 produced one thousand and eighteen standard cubic meters.
According to information supplied by the BNOCL, the gas reserves as at March 31 2013 were estimated to be or 5.195 million standard cubic metres.
Mains InstallationDuring the year under review, 5.81 miles of new mains were laid. The Corporation continued its maintenance programme which included the replacement of the overland pipeline. A total of 2.03 miles or 3.27km of mains were replaced during the year. See Appendix 1 for the summary of mains laid for the fi nancial year ending March 31 2013.
To accelerate the number of domestic service connections, the Corporation continued its programme of subsidised installations at the rate of $1,050 per installation.
Importation of Gas ProjectThe Importation of Natural Gas Project continues to be high on the agenda for the Corporation given the need to increase natural gas volumes to complement natural gas from the country’s proven hydrocarbon reserves. NPC, along with other stakeholders within the Division of Energy and Telecommunications and private sector are continuing to negotiate the fi nal arrangements to make this project a reality.
HUMAN RESOURCES OVERVIEWDuring the year under review, the Human Resources and Administration department (HR&A) recognized the need to take a different approach to its business model, which was occasioned in part by the introduction of the Safety and Health at Work Act 2005, in January 2013.
The aim was to ensure compliance with the safety and health legislation and to engender a culture of safety and health amongst all employees. This was facilitated through the provision of seminars for staff via the labour
Annual Report 201317
department and the formation of a committee in line with the Act.
Staffing & RecruitmentThe Corporation announced the appointment by promotion of Mrs Andrea Burnett-Edward Trainee Petroleum Engineer to the post of Technical offi cer and Mr Jamal Squires, Petroleum Engineer(Temp) to the post of Trainee Petroleum Engineer with effect from November 1, 2012.
The staff complement as at March 31, 2013 was 121 as compared with 120 as at March 31, 2012.
Compensation & Benefits Pensions (Insurance Corporation of Barbados) - The Corporation’s non-contributory defi ned benefi t pension plan is established under an irrevocable trust. The assets are invested in an independently administered deposit administration policy comprising treasury notes and debentures, term deposits and loans. The plan is administered through the Statutory Corporation Pension Fund.
During the period under review an additional four members retired and the balance of the plan at the end of the year totaled $15,179,881.
Training & DevelopmentThe department undertook a different approach to the area of Training and Development. In this key area, employees who undertook training became exposed to a more regimented training system which included measurable objectives, a personal development plan and psychometric testing. During the fi nancial year ending March 2013, training was facilitated in the following key areas including leadership, Gas Fitting, Fire Safety and Customer Service.
Overall, the number of training hours totaled 2,291.50 hours for the review period.
RetirementsThe Board wishes to record its appreciation of the contributions of its retirees for this period.
Oswald DanielFitter
30 Years
Anderson CampbellGeneral Worker
30 Years
Whitstanley SmithSuperintendent
41 Years
Edwin AtherleyGeneral Worker
22 Years
Annual Report 2013 18
Christmas Luncheon & Awards CeremonyOur annual staff party and long service awards took place on Friday, December 14, 2012 at the Almond Bay, Hastings, Christ Church. A total of 38 staff members were honoured for their sterling contribution to the Corporation in the categories of long service, employee of the year and perfect attendance.
Employee of the YearThe employee of the year was awarded to Mr Lerone Knight, Draughtsman who outshone the other fi nalist in the category; Mr Walton Burrowes, Draughting Assistant and Francia Springer, Clerk Typist.
KPI AwardThe KPI Award is used by the Corporation to set tangible measurements to gauge performance improvements in specifi c categories of key
business outputs. This year the coveted award was presented to the Stores Division of the Finance and Accounting Department.
KPI Awardees
Lerone Knight
Annual Report 201319
■ Margaret Vaughan
■ 10 Years ■ 30 Years■ 15 Years ■ 35 Years■ 25 Years
■ Ian Bradshaw
■ Reginald Cato
■ Wayne Bascombe
■ Cheryl Mason
■ Riven Small
■ Anderson Greene
■ Lerone Knight
■ Roosevelt Broome
■ Wayne Browne ■ Dave Downes
■ Simon Nurse
■ Glen Wiggins
■ Mark Quintyne
■ Ryan Harper
■ Edward Wiggins
■ Emmerson Scott
■ Trevor Murray
■ Henderson Lewis ■ Martin Murray
■ Stephen Weekes
■ Grace Haynes ■ Lyman Williams
■ Jeffrey Jordan
■ Roger Holder
■ Walton Burrowes
■ Anderson Campbell
■ Oswald Daniel
Annual Report 2013 20
NEW MAINSSIZE OF MAIN / DISTANCE1 1/4” H.P. P.E.
2” H.P. P.E.
3” H.P. P.E.
4” H.P. P.E.
6” H.P. P.E.
3” H.P. Steel
4” H.P. Steel
St. MichaelCutting Road - 2nd Ave 16’-6” 1102’-3”
Danesbury 584’-6” Garden Land 1655’-9” 468’-10” Haggatt Hall - 2nd Ave 292’-5”
Pine Road - ABC H’way 38’-2” 10’-0” 873’-0” 23’-6”
President Kennedy Drive 480’-1”
Small Land 2202’-7” Tudor Street 201’-2” Jackson Roundabout 103’-7”
University Hill - Gap off 434’-6”
Valerie 789’-0” St. JamesQueens Fort - Old 22’-0”
Risk Road 987’-4” St. ThomasWarrens 312’-0” 440’-0” 444’-10” Welches 1481’-11” 1980’-0” 1960’-0”Welches/Padmore 317’-0” 433’-0”
Christ ChurchAdams Castle, Vauxhall 48’-6” 1015’-0” 960’-0”
Bartlett Tenantry Road 68’-3”
Coverley 894’-8” Fairholme Gardens 358’-6”
Greenland 517’-0” 898’-0” Gall Hill - Water Street 1304’-8” 31’-5”
Appendix ISummary of Mains Laid April 1 2012 to March 31 2013
Annual Report 201321
NEW MAINSSIZE OF MAIN / DISTANCE1 1/4” H.P. P.E.
2” H.P. P.E.
3” H.P. P.E.
4” H.P. P.E.
6” H.P. P.E.
3” H.P. Steel
4” H.P. Steel
Christ Church (continued)Mahogany Court
981’-0”
Moravian Garden
1726’-0”
Rockley Meadows
48’-0”
St. PhilipCrane 1079’-0” Garrett Road 1261’-6” 1025’-1” Kirton #3 562’-0”
RELOCATION or REPLACEMENT
SIZE OF MAIN / DISTANCE1 1/4” H.P. P.E.
2” H.P. P.E.
3” H.P. P.E.
4” H.P. P.E.
6” H.P. P.E.
3” H.P. Steel
4” H.P. Steel
St. MichaelGarden Land 55’-0” 5’-0” Jackson Roundabout 341’-4”
Upton - Fort George 5’-0”
St. JamesApes Hill -Walcott Road 31’-0” 212’-5” 646’-0”
Endeavour 29’-0” Lancaster 220;’0” Orange Hill/Apes Hill 24’-5” 3076’-0” 9’-0”
St. ThomasBlowers 21’-0” Welches/Padmore 14’-0”
St. AndrewApes Hill 1687’-0” 4554’-0” 39’-0”
Summary of Mains Laid Miles Kilometers Linear Feet
New Mains 5.81 9.35 30675’-11”Relocation/Replacement 2.03 3.27 10725’-9”Total Mains Laid 12.62 41401’-8”
Annual Report 2013 22
App
endi
x II
Dist
ribut
ion
of In
com
e fo
r Per
iod
2003
/04
To 2
012/
13
Shar
eN
et
Year
Prof
it (L
oss)
Inco
me
Asso
ciat
ed C
o.(D
efic
it)
(BN
OC
L)Fo
r Yea
r
$%
$%
$%
$%
$%
$%
$%
$$
2013
16,4
39,9
90
10
08,
449,
736
51.4
03,
763,
283
22.8
92,
092,
923
12.7
348
1,68
82.
9326
8,88
71.
641,
652,
360
10.0
57,
630,
782
9,01
4,25
5
2012
15,4
67,7
66
10
08,
863,
114
57.3
03,
699,
675
23.9
22,
071,
862
13.3
950
8,11
43.
2850
00.
0032
5,00
12.
1013
,178
,056
13,5
03,5
57
2011
15,0
21,2
60
10
08,
915,
103
59.3
53,
604,
777
24.0
02,
096,
013
13.9
560
9,10
03.
39(2
,954
,583
)(1
9.67
)(2
03,7
33)
(1.1
3)11
,041
,102
13,7
91,9
52
2010
15,1
17,5
65
10
09,
007,
523
59.5
81,
479,
252
9.78
2,16
4,69
314
.32
741,
512
4.9
00.
001,
724,
585
11.4
10
1,72
4,58
5
2009
14,6
83,8
07
10
07,
994,
446
54.4
46,
572,
809
44.7
62,
079,
465
14.1
695
9,29
06.
530
0.00
(2,9
22,2
03)
(19.
90)
0(2
,922
,203
)
2008
15,2
01,1
46
10
06,
971,
535
45.8
65,
174,
760
34.0
42,
207,
017
14.5
21,
189,
878
7.83
00.
00(3
42,0
44)
(2.2
5)(1
5,47
0,21
0)(1
5,81
2,25
4)
2007
13,8
12,7
14
10
07,
319,
844
52.9
93,
786,
788
27.4
22,
103,
773
15.2
31,
508,
245
10.9
211
9,16
40.
86(1
,025
,100
)(7
.42)
452,
434
(572
,666
)
2006
13,6
24,8
68
10
06,
740,
587
49.4
73,
938,
388
28.9
12,
048,
198
15.0
31,
328,
482
9.75
11,1
330.
08(4
41,9
20)
(3.2
4)(1
,834
,178
)(2
,276
,098
)
2005
11,8
19,6
06
10
07,
324,
686
61.9
72,
693,
905
22.7
91,
935,
552
16.3
81,
011,
236
8.56
(27,
278)
(0.2
3)(1
,118
,495
)(9
.46)
(3,1
59,6
30)
(4,2
78,1
25)
2004
10,5
10,7
41
10
07,
598,
492
72.2
92,
146,
365
20.4
21,
739,
523
16.5
590
0,68
18.
5719
1,23
11.
82(2
,065
,551
)(1
9.65
)44
5,17
0(1
,620
,381
)
Net
Inco
me
(Def
icit)
Ope
ratin
g Ex
pens
esBe
fore
Sha
re
Prof
it (L
oss)
* G
ross
of d
isco
unts
and
allo
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Cor
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Asso
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o.
all s
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omm
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Annual Report 201323
NATIONAL PETROLEUM CORPORATION
Financial StatementsMarch 31, 2013
(Expressed in Barbados Dollars)
Annual Report 2013 24
25
26
27
28
National Petroleum CorporationStatement of Changes in EquityFor the year ended March 31, 2013
(expressed in Barbados dollars)
Capitalcontributed
byGovernmentof Barbados
$
Retainedearnings
$Total
$
Balance at March 31, 2011 10,407,157 10,764,807 21,171,964
Net income and total comprehensive income forthe year – 13,502,557 13,502,557
Balance at March 31, 2012 10,407,157 24,267,364 34,674,521
Net income and total comprehensive income forthe year – 8,619,100 8,619,100
Balance at March 31, 2013 10,407,157 32,886,464 43,293,621
29
National Petroleum CorporationStatement of Comprehensive IncomeFor the year ended March 31, 2013
(expressed in Barbados dollars)
2013$
2012$
SalesNatural gas 15,845,293 14,989,872
Operating expensesProduction, transmission and distribution (note 20) 4,635,797 5,409,944General, administrative and commercial 7,577,222 7,152,846Depreciation (note 7) 2,092,923 2,071,861
14,305,942 14,634,651
1,539,351 355,221
Other income (note 21) 594,697 477,894
Operating profit 2,134,048 833,115
Interest and other loan expenses (481,688) (508,114)
Net income for the year before share of associated company 1,652,360 325,001
Share of profit of associated company (note 8) 7,235,627 13,178,056
Income before taxation 8,887,987 13,503,057
Taxation (note 9) (268,887) (500)
Net income and total comprehensive income for the year 8,619,100 13,502,557
30
National Petroleum CorporationStatement of Cash FlowsMarch 31, 2013
(expressed in Barbados dollars)
2013$
2012$
Cash flows from operating activitiesIncome before taxation 8,887,987 13,503,057
Adjustments for:Depreciation 2,092,923 2,071,861Amortisation of deferred expenses 9,000 9,000Amortisation of lease premium (30,000) (30,000)Amortisation of deferred credit (115,979) (114,811)Interest and other loan expenses 481,688 508,114Interest income (17,343) (20,817)Pension expense 608,435 747,000Project income (62,420) (76,213)Share of income of associated company (7,235,627) (13,178,056)
Operating profit before working capital changes 4,618,664 3,419,135Increase in short term deposit (16,050) (36)Increase in accounts receivable (119,713) (23,832)(Increase)/decrease in inventories (152,654) 526,270(Increase)/decrease in prepaid expenses (7,074) 53,706Increase in accounts payable and accrued liabilities 304,005 808,757Increase in amount due to associated company 484,962 689,973
Cash generated from operations 5,112,140 5,473,973Interest and other loan expenses paid (481,688) (508,114)Pension contributions paid (1,397,553) (1,333,615)Progress payments received 102,269 135,497
Net cash from operating activities 3,335,168 3,767,741
Cash flows from investing activitiesPurchase of property, plant and equipment (3,107,429) (2,262,133)Interest income received 17,343 20,817
Net cash used in investing activities (3,090,086) (2,241,316)
Cash flows used in financing activitiesProceeds from borrowings 2,000,000 –Repayments of borrowings (1,200,000) (1,487,484)
Net cash from/(used in) financing activities 800,000 (1,487,484)
Increase in cash and cash equivalents 1,045,082 38,941
Cash and cash equivalents - beginning of year 586,886 547,945
Cash and cash equivalents - end of year 1,631,968 586,886
31
National Petroleum CorporationNotes to Financial StatementsMarch 31, 2013
(expressed in Barbados dollars)
1 Establishment, principal activity and registered office
The National Petroleum Corporation was established by Act of Parliament in 1979. The principal activity ofthe Corporation is the supply of natural gas to industrial, commercial and domestic customers.
The registered office of the Corporation is located at Wildey, St. Michael.
2 Significant accounting policies
The principal accounting policies adopted in the preparation of these financial statements are set out below.These policies have been consistently applied to the years presented, unless otherwise stated. Significantaccounting policies are as follows:
a) Basis of preparation
These financial statements are prepared in accordance with International Financial Reporting Standards(IFRS), under the historical cost convention except as modified by the valuation of land at Wildey atacquisition as disclosed in Note 2(d).
The preparation of financial statements in conformity with IFRS requires the use of certain criticalaccounting estimates. It also requires management to exercise its judgement in the process of applying theCorporation’s accounting policies. The areas involving a higher degree of judgement or complexity, orareas where assumptions and estimates are significant to the financial statements are disclosed in Note 3.
i) New and amended standards adopted by the Corporation
The Corporation did not adopt any new or amended standards for the financial year.
ii) New standards, amendments and interpretations mandatory for the first time for the financial yearbeginning January 1, 2012 but not currently relevant to the Corporation
IAS 1 (amendment) ‘Financial statement presentation’ regarding other comprehensive income(effective July 1, 2012)
IAS 12 (amendment) ‘Income taxes’ on deferred tax (effective January 1, 2012)IAS 19 (amendment) ‘Employee benefits’ (effective January 1, 2013)IFRS 7 (amendment) ‘Financial instruments: Disclosures’ on derecognition (effective July 1, 2011)IFRS 13 ‘Fair value measurement’ (effective January 1, 2013)
32
National Petroleum CorporationNotes to Financial StatementsMarch 31, 2013
(expressed in Barbados dollars)
2 Significant accounting policies …continued
a) Basis of preparation…continued
iii) New standards, amendments and interpretations issued but not effective for the financial yearbeginning January 1, 2012 and not early adopted
Management is in the process of reviewing the new standards, amendments and interpretations toexisting standards that are not yet effective to determine whether the following may be relevant to theCorporation’s operations and assess their impact on the financial statements. The Corporation has notearly adopted the new standards, amendments and interpretations.
IAS 1 ‘Presentation of Financial statements’ regarding the clarification of the requirementsfor comparative information (effective January 1, 2013)
IAS 32 ‘Financial Instruments: Presentation’ (effective January 1, 2014)IFRS 7 ‘Financial instruments: Disclosures’- Offsetting Financial Assets and Liabilities
(effective January 1, 2013)IFRS 9 ‘Financial instruments: Classification of Measurement of Financial Assets’ (effective
January 1, 2015)IFRS 9 ‘Financial instruments: Classification of Measurement of Financial Liabilities and
Derecognition’ (effective January 1, 2015)
b) Accounts receivable
Receivables are recognised initially at fair value and subsequently remeasured at the anticipated realisablevalue. A provision for impairment is established when there is objective evidence that the Corporationwill not be able to collect all amounts due according to the original terms of receivables. Significantfinancial difficulties of the debtor and default or delinquency in payments are considered indicators thatthe receivable is impaired.
The amount of the provision is recognised in the statement of comprehensive income within general,administrative and commercial expenses.
c) Inventories
Inventories are valued at the lower of cost and net realisable value. In general, cost is determined on anaverage cost basis. Provision is made for obsolete and slow-moving inventories.
33
National Petroleum CorporationNotes to Financial StatementsMarch 31, 2013
(expressed in Barbados dollars)
2 Significant accounting policies …continued
d) Property, plant and equipment
Property, plant and equipment other than land at Wildey are stated at historical cost less accumulateddepreciation. The land at Wildey is shown at a valuation determined at the time the land was granted tothe Corporation by the Government of Barbados. Historical cost includes expenditure that is directlyattributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset asappropriate, only when it is probable that future economic benefits associated with the item will flow tothe Corporation and the cost of the item can be measured reliably. All other repairs and maintenance arecharged to the statement of comprehensive income during the period in which they are incurred.
Depreciation is calculated on property, plant and equipment on the straight line basis so as to allocate thecost of the assets concerned over their estimated useful lives. The principal rates used for this purpose are:
Buildings - 33 yearsGas wells, pipelines, production and transmission equipment - 40 yearsDistribution plant and equipment - 10 to 40 yearsMoveable equipment and furniture:- Tools - 10 years- Office equipment, furniture and fittings - 8 to 10 years- Motor vehicles - 5 years- Communications and computer equipment - 3 to 5 years
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carryingamount is greater than its estimated recoverable amount.
Any gain or loss on disposal included in the statement of comprehensive income is determined bycomparing proceeds to the asset’s carrying value at the time of disposal.
Interest charged on loans obtained for capital expenditure projects is capitalised.
e) Accounts payable
Accounts payable are obligations to pay for goods or services that have been acquired in the ordinarycourse of business from suppliers. Accounts payable are classified as current liabilities if payment is duewithin one year or less. If not they are presented as non-current liabilities. Accounts payable arerecognised initially at fair value and subsequently measured at amortised cost using the effective interestmethod.
34
National Petroleum CorporationNotes to Financial StatementsMarch 31, 2013
(expressed in Barbados dollars)
2 Significant accounting policies …continued
f) Investment in associated company
The investment in Barbados National Oil Company Limited (BNOCL), an associated company, isaccounted for on the equity method of accounting whereby the Corporation’s share of BNOCL’s netincome or loss is included in the Corporation’s statement of income.
When the Corporation’s share of losses in an associated company equals or exceeds its interest in theassociated company, including any other unsecured receivables, the Corporation does not recognise furtherlosses unless it has incurred obligations or made payments on behalf of the associated company.
g) Grants and deferred credits
Grants related to assets, including non-monetary grants at fair value, are capitalised and presented in thebalance sheet as deferred grants. These grants are amortised over the expected useful lives of the relatedassets.
Revenue grants received are recognised in the statement of comprehensive income over the periodsnecessary to match them with the related costs which they are intended to compensate.
Payments received towards capital projects are recorded in progress payments received. The Corporationuses the ‘percentage-of-completion method’ to determine the appropriate amount to recognise in respect ofprojects undertaken for third parties in a given period. The stage of completion is measured by referenceto the contract costs incurred up to the end of the reporting period as a percentage of total estimated costsfor each contract. When based on the stage of completion it is considered appropriate to recognise incomeon the project, the costs to date are transferred to deferred credits. Deferred credits are amortised over thesame period as the capital costs to which they relate.
Costs incurred in the year in connection with future activity on a contract are excluded from contract costsin determining the stage of completion.
h) Taxation
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted atthe balance sheet date. Management periodically evaluates positions taken in tax returns with respect tosituations where applicable tax regulations are subject to interpretation and establishes provisions whereappropriate on the basis of amounts expected to be paid to the tax authorities.
The Corporation follows the liability method of accounting for deferred taxes whereby all temporarydifferences arising between the tax bases of assets and liabilities and their carrying values for financialreporting purposes are provided for at the corporation tax rate that is expected to apply when the deferredtax asset is realised or liability settled. Deferred tax assets are only recognised when it is probable thattaxable income will be available against which the assets may be utilised.
35
National Petroleum CorporationNotes to Financial StatementsMarch 31, 2013
(expressed in Barbados dollars)
2 Significant accounting policies …continued
i) Provisions
Provisions are recognised when the Corporation has a legal or constructive obligation, as a result of pastevents, if it is probable that an outflow of resources will be required to settle the obligation, and a reliableestimate of the amount can be made.
j) Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings aresubsequently stated at amortised cost: any difference between the proceeds (net of transaction costs) andthe redemption value is recognised in the statement of comprehensive income over the period of theborrowings using the effective interest method.
k) Pension plan valuation
The Corporation operates a non-contributory defined benefit pension plan. (Note 17).
Pension costs are assessed using the projected unit credit method. Under this method, the cost ofproviding pensions is charged to the statement of comprehensive income so as to spread the regular costover the service lives of employees in accordance with the advice of qualified actuaries who carry out afull valuation of the plan every three years. The pension obligation is measured as the present value of theestimated future cash outflows using the interest rates of government securities which have terms tomaturity approximating the terms of the related liability. Actuarial gains and losses are recognised at therate of 20% of the balance brought forward.
l) Revenue recognition
Sales are recognised upon delivery of service to customers.
Sales of natural gas are shown net of discounts and allowances given to customers.
m) Foreign currency translation
The financial statements are presented in Barbados dollars, which is also the Corporation’s functionalcurrency.
Foreign currency transactions are translated into the functional currency at the exchange rates prevailing atthe dates of the transactions. Foreign exchange gains and losses resulting from the settlement of suchtransactions and from the translation of monetary assets and liabilities denominated in foreign currencies,are recognised in the statement of comprehensive income.
n) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and at bank, bank overdraft, short term loans and termdeposits with original maturities of ninety days or less.
36
National Petroleum CorporationNotes to Financial StatementsMarch 31, 2013
(expressed in Barbados dollars)
3 Critical accounting estimates and judgements
The development of estimates and the exercise of judgement in applying accounting policies may have amaterial impact on reported assets, liabilities, revenue and expenses. The Corporation is not required to makesignificant estimates in its preparation of the financial statements.
4 Short term deposit
The interest rate on the short term deposit at year end was 2.95% (2012 - 2.95%)
The original maturity of the deposit is 365 days.
5 Accounts receivable
2013$
2012$
Trade receivables:Customers 2,249,604 2,066,008Servicing 603,351 760,338
2,852,955 2,826,346Less: Provision for impairment of receivables (911,738) (885,459)
Trade receivables - net 1,941,217 1,940,887Other receivables 382,087 262,704
2,323,304 2,203,591
As at year end, trade receivables of $1,003,647 (2012 - $1,820,692) were fully performing.
Trade receivables that are less than 4 months past due are not considered impaired. As at year end tradereceivables of $937,570 (2012 - $625,081) were past due but not impaired. These relate to customers for whomthere is no history of default. The ageing analysis of receivables is as follows:
2013$
2012$
30 to 60 days 932,035 501,810Over 90 days 5,535 123,271
937,570 625,081
37
National Petroleum CorporationNotes to Financial StatementsMarch 31, 2013
(expressed in Barbados dollars)
5 Accounts receivable …continued
As at year end, trade receivables of $911,738 (2012 - $885,459) were impaired and provided for. The aging ofthese trade receivables is as follows:
2013$
2012$
Over 90 days 911,738 885,459
The movement in the provision for impairment of receivables is as follows:
2013$
2012$
Balance - beginning of year 885,459 2,460,296Impairment charge 26,279 9,104Reversal of provision no longer required – (1,583,941)
Balance - end of year 911,738 885,459
Direct write offs to the statement of comprehensive income in respect of impaired receivables were $88,965(2012 - bad debt recoveries of $36,355).
No provision for impairment was required in respect of other receivables.
The carrying value of other receivables is considered to approximate fair value because of their short termmaturity.
The maximum exposure to credit risk on receivables is the carrying value disclosed above. The Corporationdoes not hold any collateral security on those receivables.
6 Inventories
2013$
2012$
Materials and supplies 1,313,860 1,232,171Provision for obsolescence (137,585) (137,585)
1,176,275 1,094,586Gas 9,469 9,469Goods in transit 144,726 73,761
1,330,470 1,177,816
No provision for obsolescence (2012 - reversal of provision of $92,614) was recorded during the year.
38
National Petroleum CorporationNotes to Financial StatementsMarch 31, 2013
(expressed in Barbados dollars)
7 Property, plant and equipment
Land andbuildings
$
Gas wells,pipelines,
productionand
transmissionequipment
$
Distribution,plant and
equipment$
Moveableequipment
$Total
$At March 31, 2011
Cost or valuation 5,381,294 8,233,059 65,651,666 6,113,984 85,380,003Accumulated depreciation (4,362,857) (7,791,616) (34,170,627) (5,415,901) (51,741,001)
Net book amount 1,018,437 441,443 31,481,039 698,083 33,639,002
Year ended March 31, 2012
Opening net book amount 1,018,437 441,443 31,481,039 698,083 33,639,002Additions 81,895 227,622 1,699,732 252,884 2,262,133Depreciation charge (179,599) (38,124) (1,645,187) (208,951) (2,071,861)
Closing net book amount 920,733 630,941 31,535,584 742,016 33,829,274
At March 31, 2012
Cost or valuation 5,463,189 8,460,681 67,351,398 6,366,868 87,642,136Accumulated depreciation (4,542,456) (7,829,740) (35,815,814) (5,624,852) (53,812,862)
Net book amount 920,733 630,941 31,535,584 742,016 33,829,274
Year ended March 31, 2013
Opening net book amount 920,733 630,941 31,535,584 742,016 33,829,274Additions 36,984 45,693 2,877,042 147,710 3,107,429Disposals – – (14,931) – (14,931)Depreciation on disposals – – 14,931 – 14,931Depreciation charge (181,586) (39,301) (1,700,075) (171,961) (2,092,923)
Closing net book amount 776,131 637,333 32,712,551 717,765 34,843,780
At March 31, 2013
Cost or valuation 5,500,173 8,506,374 70,228,440 6,514,578 90,749,565Accumulated depreciation (4,724,042) (7,869,041) (37,515,889) (5,796,813) (55,905,785)
Net book amount 776,131 637,333 32,712,551 717,765 34,843,780
39
National Petroleum CorporationNotes to Financial StatementsMarch 31, 2013
(expressed in Barbados dollars)
7 Property, plant and equipment …continued
a) Property, plant and equipment other than land at Wildey are stated at historical cost.
b) The land at Wildey, which was granted to the Corporation by the Government of Barbados in 1978, isstated at its estimated value at that time of $218,000. (Note 19).
8 Investment in associated company
The Corporation owns 20,117 common shares or a 24.5% interest in Barbados National Oil Company Limited(BNOCL).
2013$
2012$
Balance - beginning of year 20,162,867 11,041,102Share of profit for the year 7,235,627 13,178,056Dividend income – (4,056,291)
Balance - end of year 27,398,494 20,162,867
The Corporation’s share of the results of its associate and its share of the net assets are as follows:
Assets$
Liabilities$
Revenue$
Net profit$
2013 105,577,018 78,178,524 194,805,136 7,235,627
2012 115,651,119 95,488,252 200,451,993 13,178,056
40
National Petroleum CorporationNotes to Financial StatementsMarch 31, 2013
(expressed in Barbados dollars)
9 Deferred tax asset
2013$
2012$
Balance - beginning of year 2,954,083 2,954,583Deferred tax charge (note 22) (268,887) (500)
Balance - end of year 2,685,196 2,954,083
The deferred tax asset consists of the following components:
2013$
2012$
Accelerated tax depreciation (666,523) (2,558,420)Unutilised tax losses (note 23) 8,292,513 10,470,840Pension plan liability 3,114,795 3,903,913
10,740,785 11,816,333
Deferred tax asset at corporation tax rate of 25% (2012 - 25%) 2,685,196 2,954,083
The expiry dates of the tax losses are disclosed in note 23. The other temporary differences have no expirydates.
41
National Petroleum CorporationNotes to Financial StatementsMarch 31, 2013
(expressed in Barbados dollars)
10 Deferred expenses
$
At March 31, 2011
Cost 108,000Accumulated amortisation (37,500)
Net book amount 70,500
Year ended March 31, 2012
Opening net balance 70,500Amortisation (9,000)
Closing net balance 61,500
At March 31, 2012
Cost 108,000Accumulated amortisation (46,500)
Net book amount 61,500
Year ended March 31, 2013
Opening net balance 61,500Amortisation (9,000)
Closing net balance 52,500
At March 31, 2013
Cost 108,000Accumulated amortisation (55,500)
Net book amount 52,500
Commitment fees and stamp duties of $108,000 in respect of the $14.4M Bank of Nova Scotia loan are beingamortised over the twelve year repayment period of the loan.
42
National Petroleum CorporationNotes to Financial StatementsMarch 31, 2013
(expressed in Barbados dollars)
11 Accounts payable and accrued liabilities
2013$
2012$
Customer deposits 1,651,100 1,531,570Trade payables 736,725 764,906Payroll deductions 120,074 1,408Accrued expenses 2,058,814 1,964,824
4,566,713 4,262,708
12 Due to associated company
The balance due to associated company arose in the normal course of business. It is interest free, unsecuredand carries no fixed terms of repayment. Gas purchases from the associated company are disclosed in note 27.
13 Borrowings
2013$
2012$
i) National Insurance Scheme $3M loan 2,000,000 –ii) Bank of Nova Scotia $14.4M loan 7,100,000 8,300,000
9,100,000 8,300,000Current portion (1,286,480) (1,200,000)
Long-term portion 7,813,520 7,100,000
2013$
2012$
i) National Insurance Scheme $3M loan - total balance 2,000,000 –
Less instalments due within twelve months and shownunder current liabilities (86,480) –
Long-term portion 1,913,520 –
The loan is repayable in quarterly instalments of blended principal and interest of $117,427. The loanbears interest at 6.325% per annum.
The NIS loan is secured by a letter of comfort from the Government of Barbados.
43
National Petroleum CorporationNotes to Financial StatementsMarch 31, 2013
(expressed in Barbados dollars)
13 Borrowings …continued
2013$
2012$
ii) Bank of Nova Scotia $14.4M loan - total balance 7,100,000 8,300,000
Less instalments due within twelve months and shownunder current liabilities (1,200,000) (1,200,000)
Long-term portion 5,900,000 7,100,000
The loan is repayable in monthly instalments of $100,000. The loan bears interest at 6% (2012 - 5.5%) perannum.
The BNS loan is secured by a guarantee from the Government of Barbados.
14 Progress payments received
2013$
2012$
Balance - beginning of year 78,458 86,827Additions 102,269 135,497Taken to income (62,420) (76,213)Transfer to deferred credit (note 15) (32,111) (67,653)
Balance - end of year 86,196 78,458
During the year ended March 31, 2001, $55,960 was received from the Grantley Adams International Airport inrespect of work to be done at the Airport. To date no work has been performed on the project.
During the year ended March 31, 2013, the following amounts were received in respect of work to be done.
$
Adams Castle 8,075Valarie Apartments 8,183The Villages at Coverley 38,611Garden Land 47,400
102,269
44
National Petroleum CorporationNotes to Financial StatementsMarch 31, 2013
(expressed in Barbados dollars)
15 Deferred lease premium
The Corporation has leased part of its premises at Wildey to the Barbados National Bank for a period of 50years, in return for a premium of $1.5 million and an annual rent of $50. The lease premium is being broughtinto income in fifty equal, annual instalments over the period of the lease which expires in 2031.
$
At March 31, 2011
Deferred lease premium 1,500,303Accumulated amortisation (900,000)
Net book amount 600,303
Year ended March 31, 2012
Opening net balance 600,303Amortisation (note 20) (30,000)
Closing net balance 570,303
At March 31, 2012
Deferred lease premium 1,500,303Accumulated amortisation (930,000)
Net book amount 570,303
Year ended March 31, 2013
Opening net balance 570,303Amortisation (note 20) (30,000)
Closing net balance 540,303
At March 31, 2013
Deferred lease premium 1,500,303Accumulated amortisation (960,000)
Net book amount 540,303
45
National Petroleum CorporationNotes to Financial StatementsMarch 31, 2013
(expressed in Barbados dollars)
16 Deferred credit
The Corporation relocated transmission and distribution lines along Foursquare, St. Philip to Searles, ChristChurch. The cost of the mains has been capitalised and the monies received from the Ministry of Public Worksand Transport for this purpose have been deferred. These amounts are being amortised over the same period asthe capital costs to which they relate.
The cost of mains capitalised in connection with the Bridgetown Roads and Safety Improvement Project, whichwas funded by the Ministry of Public Works and Transport, the costs of extensions in connection with the FortGeorge Stage II project which was funded by Sagicor Life Inc., the costs to relocate gas mains and installationsfrom St. Lawrence Gap to Dover playing field, which was financed by the Barbados Tourism Investment Inc.,the costs of work done at Six Roads which was financed by Eastern Land Development and the costs of workdone at Dodds, St. Philip for the new prison which was funded by the Ministry of Home Affairs have beendeferred. These amounts are being amortised over the same period as the capital costs to which they relate.
The costs of installation of gas mains and connections at Emerald Park which was funded by Eastern LandDevelopment and the costs of extensions in relation to Fort George Heights Stage IV which was funded bySagicor Life Inc. have been deferred. These amounts are being amortised over the same period as the capitalcosts to which they relate.
The costs of mains completed to date at Adams Castle, Country Towers and the Villages at Coverley whichwere funded by the relevant developers have been deferred and are being amortised over the same period as thecapital costs to which they relate.
2013$
2012$
Balance - beginning of year 1,896,479 1,943,637Amortisation (note 21) (115,979) (114,811)Additions (note 14) 32,111 67,653
Balance - end of year 1,812,611 1,896,479
17 Pension plan
The Corporation’s non-contributory defined benefit pension plan is established under an irrevocable trust. Theassets are invested in an independently administered deposit administration policy comprising treasury notesand debentures, term deposits and loans.
The plan is integrated with the National Insurance Scheme (NIS) and will provide a member retiring after
pensionable salary when combined with the NIS pension (for members employed prior to September 1, 1975,no deduction is made with respect to the NIS pension).
The triennial valuation of the plan was performed as of April 1, 2009. The actuary recommended a fundingrate of 27.10% of the salaries and wages of those under the plan (8.87% to cover current service costs and18.23% to cover the pension deficit).
46
National Petroleum CorporationNotes to Financial StatementsMarch 31, 2013
(expressed in Barbados dollars)
17 Pension plan …continued
The amounts recognised in the balance sheet for the pension plan liability are as follows:
2013$
2012$
Present value of funded obligations 15,179,881 14,227,946Fair value of plan assets (12,122,684) (10,822,386)
3,057,197 3,405,560Unrecognised actuarial gains 57,598 498,353
Pension plan liability 3,114,795 3,903,913
Changes in the present value of funded obligations are as follows:
2013$
2012$
Balance - beginning of year 14,227,946 14,278,553Current service at cost 340,498 348,079Past service at cost 5,795 –Interest cost 1,083,790 1,076,866Benefits paid (827,626) (1,013,872)Actuarial losses/(gains) on obligation 349,478 (461,680)
Balance - end of year 15,179,881 14,227,946
Changes in the fair value of plan assets are as follows:
2013$
2012$
Balance - beginning of year 10,822,386 9,868,066Expected return on plan assets 721,978 651,816Actuarial (gains)/losses on plan assets 8,392 (17,239)Contributions paid 1,397,553 1,333,615Benefits paid (827,625) (1,013,872)
Balance - end of year 12,122,684 10,822,386
47
National Petroleum CorporationNotes to Financial StatementsMarch 31, 2013
(expressed in Barbados dollars)
17 Pension plan …continued
The amounts recognised in the statement of comprehensive income are as follows:
2013$
2012$
Current service cost 340,498 348,079Interest cost 1,083,790 1,076,866Expected return on plan assets (721,978) (651,816)Net actuarial gain recognised in the year (99,670) (26,129)Past service cost 5,795 –
608,435 747,000
Actual return on plan assets 730,372 634,577
The movement in the pension plan liability is as follows:
2013$
2012$
Balance - beginning of year 3,903,913 4,490,528Pension expense for the year (note 24) 608,435 747,000Contributions paid (1,397,553) (1,333,615)
Pension plan liability 3,114,795 3,903,913
Principal actuarial assumptions used for accounting purposes were:
2013 2012
Discount rate 7.75% 7.75%Expected return on plan assets during the year 6.5% 6.5%Future salary increases 5% 5%Future pension increases 0% 0%Proportion of employees opting for early retirement 10% 10%Future changes in National Insurance ceiling 3.5% 3.5%Mortality UP 94 GAM 94
Expected contributions for the year ending March 31, 2014 are $1,495,583.
48
National Petroleum CorporationNotes to Financial StatementsMarch 31, 2013
(expressed in Barbados dollars)
17 Pension plan …continued
2013$
2012$
2011$
2010$
2009$
Present value of fundedobligations 15,179,881 14,227,946 14,278,553 14,811,987 13,619,214Fair value of plan assets (12,122,684) (10,822,386) (9,868,066) (8,742,807) (7,878,280)
3,057,197 3,405,560 4,410,487 6,069,180 5,740,934
Unrecognised actuarialgains/(losses) 57,598 498,353 80,041 (1,385,840) (1,225,928)
Surplus 3,114,795 3,903,913 4,490,528 4,683,340 4,515,006
Experience adjustments onplan liabilities (349,478) 411,072 1,049,359 5,783 (405,120)
Experience adjustments onplan assets 8,392 (17,239) (117,247) (2,341) (50,800)
18 Capital grants
During 2011, the Corporation received $1,533,880 from the Government of Barbados to execute capital works.
The grant will be amortised over the expected useful life of the related assets.
49
National Petroleum CorporationNotes to Financial StatementsMarch 31, 2013
(expressed in Barbados dollars)
19 Capital contributed by Government of Barbados
This is comprised of:
2013$
2012$
Capitalised loans 950,000 950,000
Capitalised interest on loans 1,333,802 1,333,802
Capitalisation of land granted to the Corporation (note 7) 218,000 218,000
Additional capital contributed by Government of Barbadosduring 1982/83 20,000 20,000
Loan principal and interest paid by Government of Barbadosnet of consideration for shares issued in Barbados National OilCompany Limited to Government of Barbados 7,885,355 7,885,355
10,407,157 10,407,157
20 Production, transmission and distribution costs
2013$
2012$
Production 3,763,471 3,699,863Transmission 10,242 18,805Distribution 899,393 2,103,295
4,673,106 5,821,963Less:Reimbursements through jobbing (60,085) (90,376)Installation and re-connection fees (64,211) (257,074)In house services 86,987 (64,569)
4,635,797 5,409,944
50
National Petroleum CorporationNotes to Financial StatementsMarch 31, 2013
(expressed in Barbados dollars)
21 Other income
2013$
2012$
Project income 62,420 76,213Interest 17,343 20,817Rental income 222,078 216,193Miscellaneous income 146,877 19,860
448,718 333,083
Amortisation of lease premium (note 15) 30,000 30,000Amortisation of deferred credit (note 16) 115,979 114,811
594,697 477,894
22 Taxation
2013$
2012$
Deferred tax charge (note 9) 268,887 500
The tax on the Corporation’s income before taxation differs from the theoretical amount that would arise usingthe basic tax rate of Barbados as follows:
2013$
2012$
Income before taxation 8,887,987 13,503,057
Tax calculated at 25% (2012 - 25%) 2,221,997 3,375,764Tax effect of the following:Expenses not deductible for tax purposes 50,257 49,760Commercial building allowance claimed (40,938) (40,938)Investment allowance claimed (153,522) (89,573)Tax effect of share of income of associated company (1,808,907) (3,294,513)
268,887 500
51
National Petroleum CorporationNotes to Financial StatementsMarch 31, 2013
(expressed in Barbados dollars)
23 Tax losses
The following tax losses are available for set off in the future against otherwise taxable income for corporationtax purposes:
Year
Balanceb/f
$Adjustment
$Utilised
$
Balancec/f$
Expirydate
2005 491,075 800 (491,875) –2006 2,585,230 – (1,687,252) 897,978 20152007 1,696,592 – – 1,696,592 20162008 2,371,892 – – 2,371,892 20172009 1,915,347 – – 1,915,347 20182010 1,410,704 – – 1,410,704 2019
10,470,840 800 (2,179,127) 8,292,513
The above tax losses are as computed by the Corporation in its tax returns and have as yet neither been agreednor disputed by the Commissioner of Inland Revenue.
24 Staff costs
Staff costs comprise the following:
2013$
2012$
Salaries, wages and National Insurance 4,639,464 4,874,644Pension expense (note 17) 608,435 747,000
5,247,899 5,621,644
The number of persons employed at year end was as follows 121 120
52
National Petroleum CorporationNotes to Financial StatementsMarch 31, 2013
(expressed in Barbados dollars)
25 Expenses by nature
2013$
2012$
Depreciation 2,092,923 2,071,862Gas purchased (note 27) 3,763,283 3,699,675Impairment of receivables 115,244 (27,251)Insurance 465,392 473,309Internal in-house services expenses (net) 86,987 43,058Land tax 57,875 57,875Legal fees 19,028 29,785Maintenance 570,808 860,011Meter reading, accounting and collection 457,388 307,008Pensions expense 608,435 747,000Gratuities 110,526 (58,287)Rent 9,281 300Salaries, wages and National Insurance 4,639,464 4,874,644Special services 135,771 138,963Supplies 877,384 1,345,878Travel and utilities 375,526 377,442Uniforms and safety equipment 44,924 40,829
14,430,239 14,982,101Reimbursements through jobbing (60,086) (90,376)Installation and re-connection fees (64,211) (257,074)
Total operating expenses 14,305,942 14,634,651
26 Capital commitments
At the balance sheet date, the Board of Directors had approved the capital expenditure budget for 2013/14 of$2,086,400 (2012/13 - $4,077,015). None of this expenditure had been contracted for at that date.
53
National Petroleum CorporationNotes to Financial StatementsMarch 31, 2013
(expressed in Barbados dollars)
27 Related party transactions
i) The following transactions were carried out with related parties during the year.
2013$
2012$
Purchase of gas 3,763,283 3,699,675
ii) Key management comprises directors and senior management of the Corporation. Compensation to theseindividuals was as follows:
2013$
2012$
a) Salaries and directors’ fees 825,843 803,432
b) Car loans
Balance - beginning of year 68,657 104,108Loan repayments received (35,451) (35,451)
Balance - end of year 33,206 68,657
No provision was required in 2013 or 2012 for the car loans made to key management.
54
National Petroleum CorporationNotes to Financial StatementsMarch 31, 2013
(expressed in Barbados dollars)
28 Financial risk management
The Corporation’s activities expose it to a variety of financial risks: market risk (including foreign exchangerisk, cash flow and fair value interest rate risk and price risk), credit risk and liquidity risk. Management of therisk factors focuses on collection of receivables and minimising potential adverse effects on the Corporation’sperformance.
a) Market risk
i) Foreign exchange risk
The Corporation’s transactions in foreign currencies are mainly for purchases of consumable storesand services. These transactions are denominated mainly in United States dollars. Since there is afixed exchange rate between the Barbados dollar and the United States dollar, management do notconsider that there is significant exposure to foreign exchange risk.
ii) Cash flow and fair value interest rate risk
Interest rate risk is the potential adverse impact on the earnings and economic value of theCorporation caused by movements in interest rates.
The Corporation’s sole interest bearing asset is its short term deposit.
The Corporation’s interest rate risk also arises from long-term borrowings. Borrowings issued atvariable rates expose the Corporation to cash flow interest rate risk. Borrowings issued at fixed ratesexpose the Corporation to fair value interest rate risk.
The Corporation’s exposure to interest rates and the terms of borrowings are disclosed in notes 4 and13.
At the reporting date, the interest profile of the Corporation’s long term borrowings was as follows:
2013$
2012$
Fixed rate borrowings 2,000,000 –Variable rate borrowings 7,100,000 8,300,000
9,100,000 8,300,000
At year end, if interest rates on variable rate borrowings had been 1% higher or lower, with all othervariables held constant, net income for the year would have been $71,000 (2012 - $83,000) lower orhigher.
55
National Petroleum CorporationNotes to Financial StatementsMarch 31, 2013
(expressed in Barbados dollars)
28 Financial risk management …continued
b) Credit risk
The Corporation takes on exposure to credit risk, which is the risk that a counterparty will cause afinancial loss to the Corporation by failing to discharge its obligations.
Credit risk arises from cash and cash equivalents, as well as credit exposures to customers, includingoutstanding receivables.
Credit limits are defined for commercial customers. The approval process is undertaken on an individualbasis before management provides credit to these customers. For residential customers, the risk ismanaged by requiring customers to make deposits upon application for a new service in order to coverrecoverable costs. The Corporation evaluates the financial institutions with which it places cash and cashequivalents. Only reputable financial institutions with high credit ratings are considered.
The maximum credit risk exposure is as follows:
2013 2012
$ % $ %
Cash on hand and at bank 1,631,968 36 586,886 18Short term deposit 576,580 13 560,530 17Accounts receivable 2,323,304 51 2,203,591 65
4,531,852 100 3,351,007 100
56
Nat
iona
lPet
role
umC
orpo
ratio
nN
otes
toFi
nanc
ialS
tate
men
tsM
arch
31,2
013
(exp
ress
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Bar
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sdol
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28Fi
nanc
ialr
isk
man
agem
ent…
continued
c)L
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dity
risk
Prud
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dity
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man
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and
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fund
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team
ount
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itted
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ies.
The
tabl
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low
anal
yses
the
Cor
pora
tion’
sfin
anci
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and
liabi
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atur
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ased
onth
ere
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ning
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dat
the
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nce
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the
cont
ract
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atur
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The
amou
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osed
inth
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ble
are
the
cont
ract
ualu
ndis
coun
ted
cash
flow
s.
Car
ryin
gam
ount $
Con
trac
tual
cash
flow
s $
Les
stha
n1
year $
Bet
wee
n1
&2
year
s $
Bet
wee
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year
s $O
ver
5ye
ars $
2013
Ass
ets
Cas
hon
hand
and
atba
nk1,
631,
968
1,63
1,96
81,
631,
968
––
–Sh
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depo
sit
576,
580
576,
580
576,
580
––
–A
ccou
ntsr
ecei
vabl
e2,
323,
304
2,32
3,30
42,
323,
304
––
–
4,53
1,85
24,
531,
852
4,53
1,85
2–
––
Lia
bilit
ies
Acc
ount
spay
able
2,37
8,82
52,
378,
825
2,37
8,82
5–
––
Due
toas
soci
ated
com
pany
6,85
9,51
06,
859,
510
6,85
9,51
0–
––
Bor
row
ings
9,10
0,00
010
,715
,035
1,62
4,62
63,
652,
009
2,78
6,12
02,
652,
280
18,3
38,3
3519
,953
,370
10,8
62,9
613,
652,
009
2,78
6,12
02,
652,
280
Liq
uidi
tyga
p(1
3,80
6,48
3)(1
5,42
1,51
8)(6
,331
,111
)(3
,652
,009
)(2
,786
,120
)(2
,652
,280
)
57
Nat
iona
lPet
role
umC
orpo
ratio
nN
otes
toFi
nanc
ialS
tate
men
tsM
arch
31,2
013
(exp
ress
edin
Bar
bado
sdol
lars
)
28Fi
nanc
ialr
isk
man
agem
ent…
continued
c)L
iqui
dity
risk…continued
Car
ryin
gam
ount $
Con
trac
tual
cash
flow
s $
Les
stha
n1
year $
Bet
wee
n1
&2
year
s $
Bet
wee
n2
&5
year
s $O
ver
5ye
ars $
2012
Ass
ets
Cas
hon
hand
and
atba
nk58
6,88
658
6,88
658
6,88
6–
––
Shor
tter
mde
posi
t56
0,53
056
0,53
056
0,53
0–
––
Acc
ount
srec
eiva
ble
2,20
3,59
12,
203,
591
2,20
3,59
1–
––
3,35
1,00
73,
351,
007
3,35
1,00
7–
––
Lia
bilit
ies
Acc
ount
spay
able
2,29
6,47
62,
296,
476
2,29
6,47
6–
––
Due
toas
soci
ated
com
pany
6,37
4,54
96,
374,
549
6,37
4,54
9–
––
Bor
row
ings
8,30
0,00
09,
301,
000
1,74
2,50
07,
558,
500
––
16,9
71,0
2517
,972
,025
10,4
13,5
257,
558,
500
––
Liq
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p(1
3,62
0,01
8)(1
4,62
1,01
8)(7
,062
,518
)(7
,558
,500
)–
–
58
National Petroleum CorporationNotes to Financial StatementsMarch 31, 2013
(expressed in Barbados dollars)
28 Financial risk management …continued
d) Fair values
Fair value amounts represents estimates of the consideration that would currently be agreed upon betweenknowledgeable, willing parties who are under no compulsion to act and is best evidenced by a quotedmarket value, if one exists. The fair value of the Corporation’s cash and cash equivalents, accountsreceivable and accounts payable are not considered to be materially different from their carrying values,due to the short term nature of these items.
The fair value of the Corporation’s borrowings is not considered to be significantly different from theircarrying values as the current interest rates on these debts are similar to market rates existing at the balancesheet date.
e) Capital risk management
The Corporation’s objectives are to provide returns for the benefit of its stakeholders and to reduce thecost of capital.
29 Subsequent events
On October 30, 2014, the Cabinet of the Government of Barbados agreed to the merger of BNOCL and theCorporation. Subsequently on December 18, 2014, the Board at its meeting approved the merger, which isexpected to be undertaken on a phased basis over a period of one year with the first phase concentrating on themerger of the administrative and back office services.
59
Notes
60
Notes
Annual Report 2013Designed & Printed by Cole’s Printery Limited
Wildey, St. Michael, [email protected]